[Victor C]

Nice economic summary. I am not in the top 1%, and the $7500 credit made the Volt a credible purchase for me.

 

[BadMagic]

The Volt is actually a near-perfect match for the Average American. Here's the facts.

The $7500 tax credit on buying the Volt (or another EV) is not "just for the rich."
Fact 1: Anyone with income $35,351 or higher owes 25% fed tax, which is $8838 (and up)

Not to put a damper on your enthusiasm, but that isn't how federal income taxes work.

In order to have enough income to take the full $7500 credit you need to make at least (assuming no other deductions - including the standard deduction):
(single) $45,400
(married) ~$55,662

http://en.wikipedia.org/wiki/Rate_schedule_(federal_income_tax)

Still not extremely out of line with median income, but we don't want to go confusing people.

 

[jsmay311]

Fact 1: Anyone with income $35,351 or higher owes 25% fed tax, which is $8838 (and up)
http://www.bankrate.com/finance/taxes/2012-tax-bracket-rates.aspx

I'm continually surprised by how many otherwise seemingly-intelligent people don't understand how our tax brackets actually work. It's a pretty simple concept, isn't it? You don't pay taxes on all of your income at a particular rate if your last dollar is in a particular brakcet. You only pay that rate for the amount money earned WITHIN that bracket.

A single person earning $35,351 with 0 deductions would still get a $5,950 standard deduction, so their taxable income would be $29,401, and they would pay:

$8700*10% + ($29,401 - $8700)*15% = $3,975.15

$3,975.15/$35,351 = 11.2% effective tax rate

Tax Bracket Married Filing Jointly Single
10% Bracket $0 – $17,400 $0 – $8,700
15% Bracket $17,400 – $70,700 $8,700 – $35,350
25% Bracket $70,700 – $142,700 $35,350 – $85,650
28% Bracket $142,700 – $217,450 $85,650 – $178,650
33% Bracket $217,450 – $388,350 $178,650 – $388,350
35% Bracket Over $388,350 Over $388,350

If my math is right, a single person with 0 deductions would have to earn a minimum of $51,830 in 2012 to owe at least $7500 in federal income tax.

 

[KyleH]

Also, to add, there is a 0% financing over 72 months that is offered from time to time.

Although you cannot cash it out on the Volt, that is worth $2,000-2,5000. on other GM vehicles when people get that option. Even though you cannot get any money out of it, that should help on the monthly payment plans. My 0% came with zero-down, and zero payments for 45days.

And it does save money on gas comparing it to my 25mpg car. I do not drive much any more, but some friends of mine drive 20,000 each year. They can almost save $3000/year if they had a volt when gas is $3.50 and electricity is $0.11/kwh.

-KyleH

 

[Gary Norton]

I agree with your premise but the math is off a bit. Here are the Federal tax rates for 2012.

10% Bracket $0 – $17,400 $0 – $8,700
15% Bracket $17,400 – $70,700 $8,700 – $35,350
25% Bracket $70,700 – $142,700 $35,350 – $85,650
28% Bracket $142,700 – $217,450 $85,650 – $178,650
33% Bracket $217,450 – $388,350 $178,650 – $388,350
35% Bracket Over $388,350 Over $388,350

Keep in mind that these rates apply to your taxable income, after deductions, not your gross income. Even if you are single and don't itemize, the standard deduction for singles is $5950. So if you have $50,000 in income, you subtract $5950 resulting in $44,050 in taxable income. The first $8,700 is subject to the 10% rate resulting in $870 of tax liability. The next bracket nets you $3,997 in tax liability. And the part above $35K results in $2,262 of tax liability. The total on your $50,000 of income is $7,129 of taxes owed, which is a bit less than the $7500 credit.

It's still a great deal because the Volt is such a great car. But they should make this a refundable credit so that lower income earners can get the full advantage.

 

[DallasVolt]

Anyone can take advantage of the tax credit through the leasing program regardless of tax brackets. It's my understanding that the tax credit is factored into the lease rate.

 

[bonaire]

Given the way things "should" work, I'd say the Volt is for a "double-average" American household. One that makes double the median income. The outliers like a household with $40K income of retirement dollars with no mortgage, no kids in college, no credit card debt, no student loans and $1M+ invested would be entirely different than a family of 4 with a mortgage and $40K income and some credit cards. It boils down to "the nut" - how much net worth do you have and many average households have negative net worth. The "average" working family shouldn't be buying a Volt, new at least, but using the money for other more important things. Not that they can't benefit from the fuel savings but they need to buy used cars in that income-bracket in order to, basically, survive our cost of living. I'm looking forward to seeing how used Volts, Cruzes, Sonics and other econo-cars do longer-term for the used-car segment. That segment is an enormous portion of auto sales in the USA. I do believe used car sales far out-number new car sales.

 

[vdiv]

The Volt is actually a near-perfect match for the Average American.

Hey! Who are you calling average, eh?

 

[Logical_Thinker]

Given the way things "should" work, I'd say the Volt is for a "double-average" American household. One that makes double the median income. The outliers like a household with $40K income of retirement dollars with no mortgage, no kids in college, no credit card debt, no student loans and $1M+ invested would be entirely different than a family of 4 with a mortgage and $40K income and some credit cards. It boils down to "the nut" - how much net worth do you have and many average households have negative net worth. The "average" working family shouldn't be buying a Volt, new at least, but using the money for other more important things. Not that they can't benefit from the fuel savings but they need to buy used cars in that income-bracket in order to, basically, survive our cost of living. I'm looking forward to seeing how used Volts, Cruzes, Sonics and other econo-cars do longer-term for the used-car segment. That segment is an enormous portion of auto sales in the USA. I do believe used car sales far out-number new car sales.

bonaire, I happen to agree with you... I am personally following Dave Ramsey's financial management principles which are generally in line with what you described above... get out of debt; a net worth of 1M before buying a NEW car; otherwise ~3 yo vehicles = best bang for your buck.

But something like 90% of the population does not even have a basic budget. So yes, let's change America's mindset toward money management. In the meantime, spending the way they are spending, New Car buyers really can afford a Volt.

 

[TedinFortMyers]

I am an average American who has owned Volt #1506 going on 16 months and I am saving about $2500 per year. In 4 years I will have saved 10,000 Dollars and in 12 years (the amount of time I usually keep a new car) the car will have completely paid for itself. I have never owned a car that paid for itself before and I am still excited about it. AND all the time I get to drive a Volt. It is such a blast to drive.

Take Care, TED

 

[DonC]

I am personally following Dave Ramsey's financial management principles which are generally in line with what you described above... get out of debt; a net worth of 1M before buying a NEW car; otherwise ~3 yo vehicles = best bang for your buck

This strikes me as ridiculous. First of all, you need to live a little. Nothing wrong with treating yourself to a new car that you can afford, and plenty of people without a net worth of $1M can afford a new car. Second, net worth is a BS concept. Assets go up and down in value very quickly. A net worth of $1M today may not be a net worth of $1M tomorrow. Or vice versa. Income is a much better measure. Finally, the run up in used car prices over the last few years casts doubt on the idea that used cars make more financial sense than a new car, and, to the extent used cars appear cheaper than new cars, this simply reflects the reality that buying a used car is a crap shoot unless you have special information about the car you're buying.

 

[volt-me]

Don't forget some states have incentives also.

And state tax incentives make it even more affordable. Maryland gives up to a $2000 rebate on the taxes paid on the car.

 

[drbruns]

And state tax incentives make it even more affordable. Maryland gives up to a $2000 rebate on the taxes paid on the car.

I think Colorado is around $6K

 

[bonaire]

This strikes me as ridiculous. First of all, you need to live a little. Nothing wrong with treating yourself to a new car that you can afford, and plenty of people without a net worth of $1M can afford a new car. Second, net worth is a BS concept. Assets go up and down in value very quickly. A net worth of $1M today may not be a net worth of $1M tomorrow. Or vice versa. Income is a much better measure. Finally, the run up in used car prices over the last few years casts doubt on the idea that used cars make more financial sense than a new car, and, to the extent used cars appear cheaper than new cars, this simply reflects the reality that buying a used car is a crap shoot unless you have special information about the car you're buying.

I've been checking out the "cars on lawns" cars for sale lately as I cruise back and forth between Buffalo and Philadelphia every couple weeks. Saw a nice-looking Jaguar for $4000 last weekend and literally dozens of SUV's for sale for under 7000. In the far-out suburbs, such as central PA and western NY, the income-base is quite low and these folks live and breath used-cars. Some of them are strictly on government income and live an "uncharmed" life. I still look at them as Average Americans, for the most part. Many of them suffer income dips due to our American companies sending their factory jobs overseas and they're not in an area of good job opportunity. I'm a rust-belt kid and got a good education and having never been laid off since graduating college in '86, I feel very blessed compared to these Average Americans. I do believe that net worth is a huge indicator of whether someone should be spending big or not. Yes, it is living to go out and buy new cars. Yes, I've done it many times and yes, many times I went into big-debt to do it. I have had car payments since 1987 until 2009 when both my and my wife's cars were paid off. I've "lived" and paid the debt-price over the years. I will try to teach my kids "that's not living" and have them grow from the roots and start with low-end used cars and save up to buy better and better as their income and savings progress.

I know I may have brought the spirit of this thread down with my initial reply. But in my experience, those of us lucky enough to have pushed through what looks like 2-3 recessions since the 80s, along with this ongoing one, we are well above average. The millions that I have seen go into and stay on the "not in labor force" line on the monthly BLS.GOV jobs report are those who we should bring up towards the average again. If anyone reading this has a job to offer and can hire locally instead of outsourcing, please do so.